‘The Oil Ministry has established a joint committee with Iran,’ said McKee. ‘The two countries have a long border and a lot of infrastructure straddling that border and they are talking about linking their pipeline systems and exporting crude through Iranian terminals.’
According to McKee, initiatives under discussion include the piping of Iraqi crude for processing at Iran’s Abadan refinery and the re-export of refined products to meet shortfalls in the Iraqi market. ‘I think these initiatives are the kind of smart moves Iraq has to make,’ said McKee.
Baghdad has formed a number of bilateral committees with its neighbours. Meetings are ongoing between the ministry and senior oil delegations from Saudi Arabia and Kuwait to discuss areas of co-operation and the reactivation of cross-border export pipelines. South Oil Company, Iraq’s biggest producer of crude, is working with Kuwait Oil Companyfor the supply of 60 million-80 million cubic feet a day (cf/d) of associated gas via a gas pipeline shut down prior to the 1990-91 Gulf war. Volumes could rise to 300 million cf/d (MEED 30:1:04).
‘The IPSA pipeline through Saudi Arabia is still there and a diplomatic solution to reopening this will come. Ultimately, the link with Syria will have to be reopened but this is something for the Iraqis to consider in the future,’ said McKee.
The imminent reopening of the main pipeline link with Turkey should provide Iraq with another export route for up to 400,000 barrels a day of crude trapped in the Kirkuk area. The pipeline has been repeatedly sabotaged since the end of hostilities last May. McKee said: ‘The ministry has to decide when to reopen the pipeline with Turkey. It is repaired and we are feeding oil into the system to test the pump stations and the pressure ratings.’
McKee, who is in the process of handing over his CPA oil portfolio to Mike Stenson, has worked closely with interim Oil Minister Ibrahim Bahr al-Uloum to formulate a new structure for the oil industry. ‘I would get rid of all the state-run oil companies and bring the entire industry under one umbrella. You can’t compete with 14 separate entities trying to work together. The minister and I both want this structure in place sooner rather than later,’ said McKee. However, any amalgamation of Iraq’s oil sector could meet stiff opposition from within the interim governing council or any future Iraqi sovereign entity, which would both have to give their approval.